227 A.D. 351 | N.Y. App. Div. | 1929
The action is for the recovery of the sum of $288,241.59, which includes the sum of $51,491.68, assessed for special franchises, with interest on different parts thereof from the several dates of payment, being the amount paid, under protest, by plaintiff to defendant as the taxes for the years 1911 to 1921, both inclusive, upon assessments levied against its real property on a valuation in excess of $30,000, the amount of its capital stock. The action is based upon defendant’s covenant to refund, contained in a writing, to which it was a party. Its liability under that covenant is the only question. (Peop e ex rel. N. Y. C. & H. R. R. R. Co. v. Mealey, 221 N. Y. 187,199; affd., sub nom. Troy Union R. R. Co. v. Mealy, 254 U. S. 47, 50.) The answer, after certain denials, sets up the separate defenses of ultra vires and that the covenant was unreasonable, improvident, unconscionable and wasteful of city funds and property. The trial court so decided. (132 Misc. 534.) On July 21, 1851, the defendant city and four rail
The exemption act was repealed by chapter 201 of the Laws of 1909. In 1911 the valuation, excepting special franchises, was placed at $1,000,000. A certiorari to review it resulted in a decision that the repealing act was valid and not an impairment of any obligation. (Mealey Case, supra, 88 Misc. 649-667; 179 App. Div. 951; 224 N. Y. 187, 399; 254 U. S. 47, 50.)
The covenant to refund is the same in the two contracts. It is a covenant to refund to plaintiff an amount equal to the city taxes imposed upon it for any valuation exceeding its capital stock of $30,000. That was the original capitalization and has not been changed. The agreement is to refund, that is, to pay back money which ought not to have been paid. (Definition of “ refund,” Bouvier Law Diet. [Rawle’s 3d Rev.].) The exemption was of taxes upon a valuation in excess of the amount of the capital stock. The agreement was to refund an equal amount. The exemption has been repealed, but the result attempted to be effected is the same as if the act had not been repealed. It is an attempt, indirectly,
The Carter Case (supra) is not res judicata here. That was a certiorari to review the assessment for 1886, and the decision was that the assessment was illegal because of overvaluation under the exemption act. No other question was decided. The contracts were not involved and the court did not pass upon the power of the city to make a refund thereunder. And, although a conclusion of law was made that there was a “ valuable consideration ” for each contract, there was no finding of fact to support it.
Next, the contracts did not provide for the payment of the equivalent of the exemption or refund in money or services to the city. (City of New York v. Brooklyn, Q. C. & S. R. R. Co., supra; Utica Water Works Co. v. City of Utica, 31 Hun, 426, 431; 44 C. J. 4335.)
And there was no consideration to the city. The plaintiff company was organized only as the medium through which the incorporators might carry out their plans. Although the railroad property was acquired and mortgaged in plaintiff’s name, the city furnished the necessary moneys, through the sale of its bonds, which were to be paid by the companies, and the sum of $173,487.48, with interest, remains unpaid. Moreover, the companies have always owned and operated the engines and cars. And plaintiff has never earned or paid any dividends. It has had no earnings. The companies have always taken care of the disbursements through a pro rata assessment. It has been and is a railroad only in name. The companies surrendered their rights in River street, thereby lessening the traffic there, but the city gave another street for their use. The change to steam power benefited the companies. And the establishment of a single passenger station, while an accommodation to the inhabitants and the traveling public, was a distinct benefit to the companies. If there was any benefit to the city, as such, in any respect, it was very trivial as against what the city gave.
And there was no new consideration, moving to the city in the 1858 contract.
The plea of ultra vires is available to the city and proper. The basic principle of taxation is equality, so far as practicable, and the
The judgment should be affirmed.
Van Kirk, P. J., Hinman, Davis and Hill, JJ., concur.
Judgment affirmed, with costs.